A $325 million payment from Ally Financial to Freddie Mac has come to light in an exhibit deep within an amended offering document by Ally as part of a planned share sale to the public, according to the Wall Street Journal. Prior to the revelation, neither Ally, General Motors’ former financing arm which is now primarily government-owned, nor Freddie had disclosed the settlement amount, which had only been documented by the companies in their quarterly securities filings.
Like another settlement between the two firms for $462 million last December, this latest does not mark a major setback; the company had already reserved for the potential repurchase expense. However, the lack of detailed foreclosure makes it difficult for investors to know how to interpret a deal.
Investors must question how the government is balancing the need to reduce taxpayer loss with avoiding actions that may destabilize banks, the Journal said. Understanding the economics and rationale behind settlements such as the Ally deal is vital. [more]

General Motors terminated its relationships with dealerships across the United States, including several in South Florida last year, prompting hundreds of dealers to appeal the decision and seek reinstatement. The company now plans to give more than 600 dealers the chance to resume selling its cars, although South Florida dealers say the proposal will not have any affect on the area. [Miami Herald]

While lenders have notoriously struggled over the past year to convert three-month trial mortgage loan modifications to permanent fixes under Obama’s Home Affordable Modification Program, GMAC has a noticeably better track record than its peers. As of January, 17.5 percent of the delinquent mortgages it had serviced had become permanent modifications. Overall, lenders have granted permanent modifications to only 3.4 percent of participants in the three-month HAMP trials. GMAC’s superior performance in this realm may have a lot to do with its documentation requirements. The the former financial arm of General Motors, now under government control, requires homeowners to submit all paperwork before diving into a trial modification. Most others wait until the end of the three-month period to collect it, but beginning June 1, GMAC’s method will become law. The Treasury Department is requiring all servicers to gather the documents prior to granting trial modifications in order to avoid beginning the process with borrowers who ultimately won’t be able to come up with the paperwork. [USA Today]

The government’s takeover of General Motors and Chrysler meant pink
slips for car dealers across the country. Bankruptcy proceedings for
Chrysler closed five franchises in South Florida, along with two by
General Motors, though those are expected to be the first of many. The closings eliminate jobs and will push cars off the lot for far less
than market value — and force many dealers to transition to selling
used cars or selling their properties. Veteran automobile dealership broker Gordon Page of Tampa’s Gordon Page
& Associates says these conditions mean falling prices for
dealership lots. “It has devalued the price of their real estate,” says Page, a former
dealership owner who has worked in the car industry since 1958. “We
have a lot of dealers calling asking to sell real estate; a lot of
things have come up to the front and on the table,” he says. [more]